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Friday, April 28, 2017

German - Iranian trade relations

STOP THE BOMB, 27 September 2009 (updated: November 2011)

For several decades, Germany has been one of Iran's most important trading partners. Even before the revolution in 1979, German companies had attained a leading position in Iran and succeeded in holding on to it despite intermittent political ups and downs. In 2011, the exports declined for the first time in years significantly, but Germany is still the leading trading partner of Iran in the West when it comes to exports. The exports from January to August 2012 amounted to 1,5 billion Euros, which is a decline of 22% compared to the same period in 2011. However, the numbers do not include export to Iran via other countries. According to the German Statistical Federal Office, direct German exports to Iran amounted to $ 5,3 billion in 2010 (= 3,8 billion Euros). [1] The German-Iranian Chamber of Commerce published an overview of the development of the German-Iranian trade during the last decades in a bulletin on Iran. In July 2009, Germany Trade & Invest, which is the foreign trade agency of the Federal Republic of Germany, reported that Germany is ranked number 2 in the world of exporters to Iran, even before China (and after the United Arab Emirates).


During the economic crisis in 2009 German-Iranian trade relations proved to be stable. In comparison with a slight decrease of 5,3% of exports to Iran the general decrease of German exports amounted to 18,8%. Here you can find statistics about European exports to Iran and imports from Iran for 2000 - 2010 (source: Eurostat)

The United Arab Emirates (UAE) loophole: The UAE were the world's largest exporter to Iran. Most of the goods are re-exports from countries like Germany. In 2008, German exports to the United Arab Emirates increased by 48 percent, amounting to 8.16 billion Euros – twice the value of all exports to Iran. In the same period UAE exports to Iran had been increasing, too. According to the German Statistical Federal Office German exports to the UAE in 2010 amounted to 7,6 billion Euros. 

German companies in Iran: The AHK Iran (German Chamber of Foreign Trade in Tehran) has about 2000 members. The German Iranian Chamber of Commerce published a brochure containing the names and addresses of 200 German companies which are present in Iran. Besides big conglomerates such as Siemens, BASF, Bayer or Daimler, ThyssenKrupp, Linde, Lurgi and others mainly medium sized companies like Wirth or Herrenknecht are active in Iran; thousands of German companies have sales personnel in the country (compare an analysis of the brochure here: "who is who in Iran").

In January 2010, Siemens announced that the company would stop making new contracts beginning in summer 2010. Siemens announced this decision after protests from STOP THE BOMB and others. Similar announcements of the Linde AG, ThyssenKrupp, Daimler, Münchener Rück followed. It is not known to what extent these companies are still active in Iran, fulfilling old contracts.

What matters is not only the quantity but the particular kind of merchandise which Germany exports. The most important export products to Iran are important machinery of a large variety, iron and steal products, chemicals, electronic technology and motor vehicles. [2] German conglomerates like Siemens and other such conglomerates, but also medium sized companies like Steiner have been active in the Iranian energy sector and were involved in the construction of power plants and gas liquefaction. The EU sanctions of 2010 target Iran's energy sector, but allow fulfilling old contracts. German companies participate in Iran's trade fairs on a regular basis - most recently at the oil trade fair in 2008 and in 2009. (You can find a list of the German exhibitors here and here.)

According to Michael Tockuss, executive director of the German-Iranian Chamber of Commerce in Teheran, two thirds of all medium-sized factories in Iran are outfitted with German machinery, and are therefore dependent on a reliable supply of German spare parts. The extent and special nature of the German-Iranian business relations indicate that Germany has in fact still considerable leverage to exert pressure on the political leadership of the Iranian regime due to its economic dependence on German trade, even after the new sanctions.

The German Chamber of Foreign Trade (AHK) in Tehran (financed by the German government!) and the chambers of commerce in Germany are still fostering more trade with Iran - in spite of the ongoing and massive human rights abuses in Iran; in spite of Iran’s nuclear program; in spite of its threats against the very existence of Israel and in spite of international efforts for tougher sanctions.

Public seminars are periodically conducted in Germany with the purpose of assisting German entrepreneurs to connect with Iranian trading partners and which train them to be successful in competing on the Iranian market. The Iranian trading partners are mainly state-controlled conglomerates or companies. Approximately 70% of Iranian companies are directly or indirectly run by the Iranian regime. For example: the Revolutionary Guard which are subcontractors and which profit handsomely from these businesses and contribute substantially to the widespread corruption. In fact, most business transactions in or with Iran provide direct support to Iran's political leadership. 

Secrecy: Due to fear of a “tainted reputation”, many companies try to hide their Iranian business activities. Even members of the Iranian government, who used to publish business transactions with Western companies in order to demonstrate the international acceptance of its regime, now tend to act quite discretely. German companies are warned by Iranian officials not to inform the German public about their business transactions in Iran. In 2008 this was the explicit message of the Iranian vice foreign minister Mehdi Safari when he traveled through Germany with the intention of attracting more German business.

Front Companies: Due to the fact that the Iranian Defense Ministry and some companies related to the Revolutionary Guards are targeted by sanctions, part of the business with Iran is now operated through front companies in order to bypass sanctions. So far, little is known about these companies and there are no established regulations to control and contain these transactions. In 2007 the "National Council of Resistance of Iran" identified three German companies which had direct connections to the Iranian Ministry of Defense and to the Revolutionary Guards: Ascotec Co., Persia System Co. and Farzanegan Co. [3] "Bafa" (The Federal Office for Economy and Export Control) is responsible for the control of the exports to Iran.

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[1] In 2009 German exports to Iran amounted to 3,7 billion Euros, and in 2008 to 3,92 billion Euros. Source: German Statistical Federal Office. Compare also: "Foreign Trade. Ranking of Germany's trading partners in foreign trade" (PDF)

[2] Compare Germany Trade & Invest, "Wirtschaftsdaten kompakt: Iran" (PDF)

[3] Compare the report in the Washington Times of 17 November 2007, only online on the blog "wind in the wires". See also the webpage of the National Council of Resistance of Iran.